Week 2- Licenses and proprietary estoppel Flashcards

Question

What are LJ Scarman's criteria for methodically approaching the issue of proprietary estoppel?

Answer 1

“If the plaintiff has any right, it is an equity arising out of the conduct and relationship of the parties. In such a case I think it is now well settled law that the court, having analysed and assessed the conduct and relationship of the parties, has to answer three questions. First, is there equity established? Secondly, what is the extent of the equity, if one is established? Thirdly, what is the relief appropriate to satisfy the equity?”

Answer 2

Facts- Cooke was promised that she could remain in a ‘home for life’ by her partner and her boss, who lived together. After her partner died, Cooke wished to remain in the house, whereas the owners of the house wanted to remove her. Cooke claimed proprietary estoppel. Significance- Cooke did not have to prove reliance, it was assumed she had acted to her detriment by staying there without looking for a new job. Lord Denning- “Applying those principles here it can be seen that the assurances given by Kenneth and Hedley to Doris Cooke — leading her to believe that she would be allowed to stay in the house as long as she wished — raised an equity in her favour. There was no need for her to prove that she acted on the faith of those assurances. It is to be presumed that she did so. There is no need for her to prove that she acted to her detriment or to her prejudice. Further to this, the burden of proof was extended in relation to reliance/ detriment; once there was proof of a representation that was likely to influence the representee, made with the intention to influence him, the burden of proof fell on the representor to rebut this presumption- according to Lord Denning's interpretation of proprietary estoppel at least. This was not shared unanimously among the lords however.

Answer 3

Facts- TF held leases on two business premises, and both companies holding these leases asked their landlords to renew the leases. All parties believed that the two leases were accompanied by a statutory right to renew when the initial lease came to an end, so TF and the other company spent money renovating the premises, but the trustee company refused to renew the lease when they learnt of their rights. The plaintiffs claimed their initial allowance that they could renew was enforceable, and D should be estopped from going back on this. Significance- In this case, estoppel was not available on the facts due to a common mistake and no element of enticement to believe the mistake. No unconscionability was made out. Contrary to Fry J’s assertion, Oliver J asserted that proprietary estoppel is not restricted to cases where the defendant knows his rights, and that it is not possible to formulate strict and rigid rules The inquiry which I have to make therefore, as it seems to me, is simply whether, in all the circumstances of this case, it was unconscionable for the defendants to seek to take advantage of the mistake which, at the material time, everybody shared, and, in approaching that, I must consider the cases of the two plaintiffs separately because it may be that quite different considerations apply to each. Oliver J clarified that Willmott was only a case applicable to situations where someone had stood by without protest as his rights were infringed”

Answer 4

Facts- Cobbe claimed that the landowner, the defendant, had sat by and encouraged him to go to great expense acquiring planning permission for a development, and should not be able to renege on their agreement to continue building with Cobbe. Significance- Cobber had “ran a commercial risk with his eyes open. This was commerce” Cobbe was awarded £150,000 on a quantum meruit basis, but no proprietary estoppel was made out. Lord Scott: “The pleadings do not answer these questions. The terms of the oral "agreement in principle", the second agreement, relied on by Mr Cobbe are pleaded but it is accepted that there remained still for negotiation other terms. The second agreement was, contractually, an incomplete agreement. The terms that had already been agreed were regarded by the parties as being "binding in honour", but it follows that the parties knew they were not legally binding. So what is it that the appellant is estopped from asserting or from denying? The appellant cannot be said to be estopped from asserting that the second agreement was unenforceable for want of writing, for Mr Cobbe does not claim that it was enforceable; nor from denying that the second agreement covered all the terms that needed to be agreed between the parties, for Mr Cobbe does not claim that it did; nor from denying that, pre 18 March 2004, Mr Cobbe had acquired any proprietary interest in the property, for he has never alleged that he had.” - Unconscionability is not an independent test, as per Lord Walker: “equitable estoppel is a flexible doctrine which the court can use in appropriate circumstances, to prevent injustice caused by the vagaries and inconstancy of human nature. But it is not some sort of joker card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side. Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way”. As such, the claimant must show the key elements of representation, reliance and detriment as one strand of the test. Commercial parties being treated more harshly, more commercial awareness expected.

Answer 5

Facts- Holt had made many representations to Gillett about his eventual inheritance of the farm, but in 1995 Holt tried to sack Gillett and remove him and his wife from the farm, and remove him as a beneficiary under his will. Gillett claimed proprietary estoppel to remain in possession of the land he had worked, and to be given compensation or land in the main farm. Significance- The Court of Appeal reversed the previous decision and held that G could rely on promissory estoppel. Robert Walker LJ held that Mr Gillett was entitled to a share of the property and could not simply be ejected: "The fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round… The assurances of 1975 "were intended to be relied on, and were in fact relied on." "The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial... There must be sufficient causal link between the assurance relied on and the detriment asserted… Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded - that is, again, the essential test of unconcsionability. The detriment alleged must be pleaded and proved…"

Answer 6

Facts- Thorner for his cousin for 30 years unpaid, working long hours under the belief that he would inherit the farm. There was no explicit promise or assurance, and the farm was left to thorner and others before the will being destroyed after a falling out, and so the property passed by statute to others. Thorner claimed proprietary estoppel, which was rejected in the court of appeal, so he appealed to the house of lords. Significance- Whether statement or conduct is sufficiently clear to give rise to an estoppel must be considered in the retrospective context including the character and relationship of the parties The subject matter of a proprietary estoppel as to be certain from the date it arises but its extent can fluctuate until it crystallises on the date the proprietary estoppel takes effect. The House of lords thus found in favour of Thorner: Lord Walker held the elements for a proprietary estoppel are (1) a promise or representation by the defendant that the claimant has or will acquire some right in relation to the defendant's land (2) the claimant's reasonable reliance on this promise/representation (3) detriment suffered by the claimant by reason of his reliance on that promise/representation

Answer 7

Facts- T had bought the land from an elderly relative (G) shortly before G died. C had been living on and cultivating the land for more than 30 years. It was his case that G had promised to leave the land to him upon her death, and that, by working on the land and taking care of G until she died, he had relied on that promise to his detriment. Significance- Privy council found in favour of the plaintiff for the detriment suffered. ON The issue of detriment: proportionality goes to the root of proprietary estoppel. Determining the potential disadvantages/ detriment of one party compared to benefits which they might have accrued from reliance. “He should have weighed any disadvantages which Calixtus Henry had suffered by reason of his reliance on Geraldine Pierre's promises against any countervailing advantages which he had enjoyed by reason of that reliance. Had he done so, he would have brought into account on, as it were, the debit side of the account the evidence contained in paragraphs 5, 6 and 7 of Calixtus Henry's witness statement… As to the relationship between reliance and detriment in the context of the doctrine of proprietary estoppel, just as the inquiry as to reliance falls to be made in the context of the nature and quality of the particular assurances which are said to form the basis of the estoppel (as in Thorner v Major), so the inquiry as to detriment falls to be made in the context of the nature and quality of the particular conduct or course of conduct adopted by the claimant in reliance on those assurances. Cant engage in a complete reassessment when a third party becomes involved- may consider them in a proprietary estoppel claim and the effect of ss116 of the LRA 2002, how do we prioritise the third party or the person engaging in claiming for proprietary estoppel.

Answer 8

- They can provide the expectation measurement ie the value of what was expected when the party relied upon a promise - They can provide the reliance based award ie the detriment they suffered or what they did on reliance of an assertion. - They can exercise proportionality, as they did in Jennings v Rice, and award on a somewhat quantum meruit basis and exercise discretion in providing a proportional reward with regards to any mitigating benefits obtained. This was also done in Habberfield v Habberfield.

Answer 9

Facts- “J began to work as a part time gardener for Mrs Royle in 1970. Over the years he did more for her including taking her shopping and running her errands. In the late 1980s Mrs Royle stopped paying him but provided a deposit of £2000 for him and his wife to buy a house. By things said by R, J believed he would be entitled to some or all of R’s house upon her death, although nothing was put in writing and no assurances were specific. R died intestate with an estate worth £1.3 mn, and prior to this J had stayed on her living room sofa for almost three years as she was increasingly dependent on him. Significance- £200,000 awarded to J on the basis of proprietary estoppel- the full estate was disproportionate and excessive compared to the work he did for her. This was affirmed by the court of appeal, who considered the starting point for whether a full expectancy should be awarded to the representee, or if this should be departed from as in the present case. The starting point is the value of the expectation, not the value of the reliance. From here, the court has the discretion to award a lesser sum/ lesser amount of property, considering the value of the claimants reliance and whether a full award would be disproportionate. Aldous LJ said: “reliance and detriment are two requirements of proprietary estoppel and that the basis of the estoppel is, as lord Denning said in Crabb, the interposition of equity. If the conscience of the court is involved, it would be odd that the amount of the aware should be set rigidly at the sum expected by the claimant.” Thus a more limited remedy may be more appropriate in certain circumstances. The closer the case is to a bargain, the more likely that the court is to compensate for the expectation ie services rendered in return for a quantifiable expectation held by the victim.

Answer 10

Sledmore v Dalby. Facts- The claimant leased her house to her daughter and son-in-law (the defendant). The claimant represented to the defendant that the house would belong to them. After the daughter died, the defendant lived in the house rent-free with his children, equating to 17 years, though after a time their residency became infrequent. The claimant tried to regain possession of the house after she fell into dire financial straits. The defendant resisted possession on the grounds of proprietary estoppel. Issues: A person will have an inchoate ‘equity’ in land if they can establish proprietary estoppel: that the land-owner made an unequivocal representation of proprietary entitlement to an individual, which that individual relied on to their detriment, such that it would be unconscionable for the land-owner to renege on his assurance. The court has a wide discretion as to what remedy to grant to satisfy this equity: whatever is necessary to do the minimum justice required. The issue in this case was what factors may be considered when determining what the minimum justice of the case requires, and whether the court is entitled to grant no remedy at all. Held: The Court of Appeal held in the claimant’s favour. When determining how to satisfy the equity, the court held the following factors relevant: the time which had passed since the equity arose, the fact that the defendant made little use of the property, and the fact that the claimant truly needed the property. Taking these into account, no remedy needed to be granted to the defendant to do minimum justice in this case. This meant that the defendant had no proprietary interest with which to resist the possession claim, and the claimant could be granted possession of the house. It may be possible that enough of a gain has been made so the inchoate claim has been spent and nothing more is to be done- once again goes back to the issue of proportionality.

Answer 11

S116- from that point in time before a claim is brought, the equity is inchoate and binds a successor in title. Equity crystalises later on if the court awards a proprietary right over the property after the claimant had realised his right. Proprietary estoppel and mere equities It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following— (a)an equity by estoppel, and (b)a mere equity, has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

Answer 12

Lord Denning attempted to re-formulate an assertion that licenses can be personal in nature through the imposition of a constructive trust in favour of a license holder. In Binions v Evans, the notice of a license and an assertion that a disposition would be subject to the rights of other licensees was enough to impose a constructive trust in favour of the incumbent licensee. This was overruled in the cases of Arnold Anstalt and Lyus v Prowsa- in the former, dispelling Lord Denning's assertions in both Errington and Binions, it was decided that contractual licenses can (in almost all circumstances) neither arise through a constructive trust when notice to a purchaser is given, nor through simply giving effect to the contractual term purporting to perpetuate the license of the licensee as against a third-party. Errington may have been correct on its facts because the equitable Right to remain so long as mortgage instalments were paid perhaps worked on a contractual analysis regarding unilateral contracts, but Denning's reasoning in the wider context of land law was unsound.

Answer 13

Contrast this case to Yeoman v Cobbe, where it was held that proprietary estoppel does not arise in the course of negotiations – the difference is that in this case there was subsequent conduct that confirmed the representations made, whereas only an agreement in principle had been reached in Yeoman.

Answer 14

Identity of the property In Cobbe there was total uncertainty as to the subject of the benefit (whether it was a proprietary right, a contractual right or money) and its extent (freehold, leasehold or charge): [94] In this case, the extent of the farm might change but there is no doubt that the subject of the assurance was the farm as it existed from time to time: As in the case of the floating charge, while the subject of the equity can be identified the moment it comes into existence, the precise extent of the equity fell to be determined when the equity crystallised, namely on D’s death: [95] Nature of relationship In Cobbe the relationship was arm’s length commercial, and the parties have consciously chosen not to contract: [96] In this case the relationship was familial and neither had contemplated entering into a formal contract: [97

Answer 15

- Unconscionability is not an independent test, as per Lord Walker: “equitable estoppel is a flexible doctrine which the court can use in appropriate circumstances, to prevent injustice caused by the vagaries and inconstancy of human nature. But it is not some sort of joker card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side. Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way”. As such, the claimant must show the key elements of representation, reliance and detriment as one strand of the test.

Answer 16

Habberfield v Habberfield The case also restated the importance of proportionality. A claimant’s expectation was not determinative of the relief which should be granted. Instead, the relevant question was whether the award was out of all proportion to the detriment. As Lord Justice Lewison wrote in his judgment: ‘The relevant comparison for the purposes of proportionality is a comparison between detriment and remedy. Nevertheless, proportionality is not a question of mathematical precision. Like all cases in which the court decides how to satisfy an equity, it must exercise a judgmental discretion, and may do so in a flexible way.’ The Lord Justices agreed that, to raise the £1.2 million, the farm would have to be sold. This was despite the fact that the sale would deprive the Defendant of her home; it was evidenced, though, that the Defendant had sufficient means to rehouse herself and meet any shortfall in income. The Claimant was 51 years of age. An immediate award was necessary so that she could begin farming on her own account. In addition, the breakdown of the familial relationships made a clean break especially attractive.

Answer 17

In bargain cases, where the victim bargains with the other party for a certain expectation upon the completion or refraining of an action, the courts will reward this expectation without exercising discretion. However, the courts, following Jennings v Rice, will exercise discretion in finding a sufficient ground between the detriment suffered (often unquantifiable) and the expectation held by the victim due to this detrimental reliance on the representation regarding the rights in land. In Jennings v Rice, the expectation of the entire estate was disproportional to the work he had done, pro bono for the woman, and £200,000 was deemed a correct sum of money to be paid on a Quantum Meruit basis.

Week 2- Licenses and proprietary estoppel Flashcards

(41 cards)